A regression analysis between sales (in $1000) and advertising (in $100) resulted in the following least squares line: .This implies that if advertising is $600, then the predicted amount of sales (in dollars) is $125,000.

Question

A regression analysis between sales (in $1000) and advertising (in $100) resulted in the following least squares line:  .This implies that if advertising is $600, then the predicted amount of sales (in dollars) is $125,000.

Quizplus · Accepted Answer

The given information implies that the slope of the least squares line is 1250 (since 100*$12.5 = $1250). Thus, the equation of the least squares line is:

Sales = 1250(Advertising) + b

To find b, we can use the fact that the predicted amount of sales is $125,000 when advertising is $600:

125,000 = 1250(600) + b

b = 125,000 - 750,000 = -625,000

Therefore, the equation of the least squares line is:

Sales = 1250(Advertising) - 625,000

When advertising is $600, the predicted amount of sales is:

Sales = 1250(600) - 625,000 = $125,000

So the statement is true.

A Regression Analysis Between Sales (In $1000) and Advertising (In